Six key drivers for international expansion

Internationally active companies are more effective and competitively viable. Nevertheless, there are some conditions in this regard: a stable return on sales, free cashflow, experience and know-how. And what’s more, an existing demand in the target market. So, here are six key drivers for a successful internationalisation.

1.Consideration of local situation 

When in Rome, do as the Romans do! Other countries may have different market and price structures as well as the customers may have other socio-economic characteristics. That means the own structures probably have to be adapted.

2.Organisational structure

It has to be decided whether the company will have a central headquarter or adecentralised organisation by country. Best is a flexible combination of both.

3.Active management of risk

Concerning the “Handelsblatt” analysis “Leitfaden zur Planung von Auslandsexpansionen“ the biggest difficulty during internationalisation is the lack of legal compliance and the protection of intellectual property. This is why it is important to draw up corporate guidelines and a detailed finance plan.

4.Financial resources
According to an empirical study by IKB Deutsche Industriebank, companies with high equity capital are more successful abroad. Besides, the access to long-term and reliable financial sources has to be safe as it is important for high investments, competitiveness and the backup of initial abstraction.5.Personal resources
Skilled and experienced staff is one of the main key factors. Among foreign experiences, language skills according to the country are very important. Additionally, knowledge about the fiscal, bureaucratic and legal framework condtions is indispensable.
6.Market relevant factors
To brace oneself for the new market, a thorough, profound market-, competition- and customer analysis is necessary. Together with an outline of the competition and sensitivity and risk analyses to define the market entrance strategy and the

marketing mix. Last but not least, a broad network of partners is the key factor to become successful in the target market.

 

source: Handelsblatt Research Institute, “Leitfaden zur Planung von Auslandsexpansionen"